Question

3.

Explain the effects that scarcity of a particular product might have on demand and price for
that product.

Answer 1

Answer:

In a free market, it can be expected that the price will increase to the equilibrium price, as the scarcity of the good forces the price to go up. When a product is scarce, consumers are faced with conducting their own cost-benefit analysis; a product in high demand but low supply will likely be expensive.